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Why do couples cohabit? On the increasing trend of cohabitation

Cohabitation has become a common practice in the U.S. In the 2006-2010 National Survey of Family Growth (NSFG), 11% of 15-44-year-old women in the U.S. were cohabiting. A majority of women have experienced cohabitation in their lifetimes. However, this is a new practice. In the NSFG 1973, only about one percent of women was cohabiting. In this paper, I study what has caused this change. I find that increasing income volatility and the closing gender earnings gap cannot explain the trend.

Educational gradients in marriage, cohabitation, and fertility

In this paper, I study the choice between marriage and cohabitation joint with fertility decisions. I document that there are educational gradients in fertility and union choices. Less educated women are more likely to cohabit and give birth while cohabiting than are more educated women. I build a lifecycle model of fertility and household union choice, featuring a trade-off between quality and quantity of children in order to be consistent with these observations. In the model, I assume that married couples pay a cost to divorce. Cohabitation provides costless separation, but there is exogenous separation shock. As more educated women choose to have children of higher quality than quantity compared to less educated women, they are more likely to choose marriage, which is more stable than cohabitation. Less educated women start household unions even with low match quality in order to have the economic benefit of living together. The calibrated model generates educational gradients observed in data. Using the calibrated model, I introduce common-law marriage to the economy. I find that the policy leads fewer people to choose cohabitation, and more children are born to married parents. As a result, children receive 20% more investment during their childhood compared to the economy without the policy.